Figures issued by the SMMT show that new car sales fell in July by 3.5%, adding to concerns over the impact on vehicle sales of the UK's low rate of economic growth.

The car market is down 6.7% over the year-to-date with July being the 13th successive monthly decline in volumes. Private new car registrations fell by 9.2% in July and have fallen by 17.3% or over 100,000 units over the first seven months of the year.

The SMMT said that the fleet side of the market held up better than the retail (private buyer) side, with fleet purchases up 2.1% in July and by 3.3% over the year-to-date. The UK car market remains on track to meet full year forecast of 1.93 million units, the SMMT said.

“New car registration figures fell marginally by 3.5% to 131,634 units in July, reflecting the impact of slower economic growth and subdued consumer confidence,” said Paul Everitt, SMMT Chief Executive.

The SMMT also said that the 3.5% fall in registrations in July was broadly in line with expectations, given the challenging economic climate.

Diesel registrations were just 53 units shy of last July’s level and over the year-to-date have grown by over 35,000 units to account for 50.2% of the overall market and 52.4% of the July market, up from 44.0% and 50.6% respectively a year ago.

Vauxhall’s Insignia was the top selling diesel in July, just ahead of the year-to-date best selling VW Golf.

The Ford Fiesta was the best selling model in the overall new car market in both July and the year-to-date.

The Supermini segment accounted for an improved 34.2% share of the July market in 2011, but only the Mini and Executive segments posted growth in the month.

Commenting on the latest car market figures, David Raistrick, UK Manufacturing Leader at Deloitte, said: “Today’s figures whilst disappointing, come as no real surprise. Challenging economic conditions have resulted in both corporate and private buyers delaying large capital purchases and as the industry continues to be hit by a number of adverse circumstances, I believe new registrations will not exceed the two million mark, but more likely will reach around 1.9 million this year.

“Whilst these figures are seen as an important industry barometer, July is not regarded to be a key month of the year. I forecast that August will also show a decline, but all eyes will be on the industry’s September’s figures, when the new registration plates are issued.

“Car fleet operators in the corporate sector have held on to their cars for a longer period of time in an attempt to reduce costs. And, in the private sector, dwindling consumer confidence, brought on by fears around job security and increases in the cost of living is undoubtedly playing a part in weakening demand. “

However, Raistrick holds out hope of an improving position over the coming months.

“Despite large swathes of both corporate and private buyers having postponed replacing their vehicles over the last year or so, there comes a tipping point where the reduced depreciation is offset by the increased running costs and reduced reliability associated with an older vehicle.

“A much needed improvement in the short to medium term may therefore just coincide with the critical September new registration plates, as the balance between retention and replacement narrows, and low interest rates continue to further assist. Whilst the current months outlook is therefore meagre, I expect to see a real improvement over the next quarter.

“On a further positive note, with Government grants available toward the purchase of electric cars, and the UK tax system continuing to encourage consumers to “go green”, choosing a lower emission vehicle has never been more appealing. The UK now has one of the lowest, if not the lowest, average passenger vehicle emission figures in the world.”